As part of the state’s ambitious W-2 welfare reform program, Wisconsin counties are contracting for eligibility determinations, case management, employment and other welfare-related services. Building on the managed care concept, Wisconsin’s welfare contracts are awarded on a capitated rate basis, meaning the contractors receive a fixed amount per client, regardless of how much service costs are for that individual (although, due to the newness of the concept, the state is sharing in some of the financial risk). One region of Milwaukee County has competitively contracted for screening, training and placing welfare recipients in jobs. Milwaukee was carved into six regions and public, private and non-profit firms bid to administer the different regions. Each contractor is paid a flat amount to screen, train and place clients in jobs. This offers a powerful incentive to find work for the clients because otherwise the contractor could lose money.

Maximus, a private company specializing in welfare, child support enforcement, and job training, was the only for-profit firm to win a region. "Serious economic consequences exist if we are not successful," says Larry Townsend, vice president of Maximus’s welfare division. "It’s sort of like capitated welfare." Maximus employees are a mixture of social workers, people with business experience, and individuals with experience in remedial education. "Having a workforce with a combination of people with different backgrounds is the best model," says Townsend, who’s managed welfare programs from both the public and private sides. "That way you get more creativity and a more dynamic mixture."

Kenosha County in Wisconsin has funded a multi-provider job center for welfare recipients since 1990. Services related to job training, placement, and retention are available at the center. And although the center emphasizes a cooperative approach to delivering services, the 18 providers at the center compete against each other for contracts.

Wisconsin officials expect the competition engendered through performance contracting will lead to a larger and more diverse market of service providers, which in turn will give counties greater leverage in future W-2 re-bids.

In San Francisco, welfare recipients without small children are now required to attend an employment and training program administered by Nebraska-based Curtis & Associates (though staffers are still employed by the city Human Services Department). The company is placing about 40 to 60 people who complete the program in jobs per month and has a dropout rate of only 17 percent — 20 percent better than when the city ran the program.

Newport, with a population of 6,100, closed down its welfare department in June 1996 and contracted with a local non-profit group to provide one-stop shopping for welfare services. The contract with Community Alliance of Human Services is saving the city 50 percent. Applicants for aid now must fill out only one set of papers and when they’re back on their feet, they have to repay the town.